Mon: the 2-year drew 2.59 cover with the year's lowest indirect share, the 10-year held at 4.99 and the dollar rose.
Written Monday October 26 after the close, covering Monday October 26; no plan was registered for Monday. The $69 billion 2-year cleared at 4.708 percent with 2.59 cover and 45.7 percent indirect, the lowest indirect share of 2026 (TreasuryDirect). The 10-year closed flat at 4.986 percent; DXY rose 0.20 percent to 101.999 and December Brent fell 1.3 percent (Yahoo). Breakevens flat (FRED). CME FedWatch, via FXStreet: 90.6 percent pause for Oct 28. Two conditional statements for Tuesday.
Written Monday October 26 after the close, covering Monday October 26. No plan was registered for Monday, so nothing here is graded. Drafted Monday evening; built and committed before the US open on Tuesday October 27, with no Tuesday data used. The $69 billion 2-year note auction drew a bid-to-cover of 2.59 and the smallest indirect share of any 2-year sale this year. The 10-year closed at 4.986 percent, flat on the day. The dollar index rose 0.20 percent to 101.999 at 4:00 PM ET, December Brent gave back $1.56 to $115.56, and the S&P 500 rose 0.70 percent.
This continues the Friday note, where a 57.6 flash composite PMI triggered nothing in the plan and oil lifted yields 3.5 basis points. Monday, the day before the Fed's two-day meeting starts, oil eased and yields barely moved.
What happened
- 2-year note auction. $69 billion (CUSIP 91282CRU7, 4.625 percent coupon, matures October 31, 2028) at a high yield of 4.708 percent, bid-to-cover 2.59. Of $67.83 billion in competitive awards, indirect bidders took $30.98 billion (45.7 percent), direct bidders $28.03 billion (41.3 percent) and primary dealers $8.82 billion (13.0 percent). Median yield 4.655 percent, low 4.580; 80.83 percent of bids at the high yield were filled (source: TreasuryDirect auction record). Against the nine 2-year auctions of 2026, the indirect share was the lowest (the next lowest was June's 55.5 percent) and the cover the lowest since March's 2.44. investingLive put the when-issued yield at 4.705 percent, a 0.3 basis point tail; we have no when-issued series of our own to check that. How to read these numbers is in Treasury auction demand.
- Dallas Fed manufacturing, October. 13.4 against 9.8, per an investingLive headline. We did not read the Dallas Fed release, so treat the figure as secondhand.
- Fed pricing. FXStreet, citing the CME FedWatch Tool early Monday, reported "a 90.6% probability of a rate pause at the October 27-28 policy meeting" and "a 79.7% chance of a rate increase in December." We did not read CME directly.
The tape
| Market | Fri Oct 23 | Mon Oct 26 | Change |
|---|---|---|---|
| 5Y yield (close) | 4.805% | 4.824% | +1.9 bp |
| 10Y yield (close) | 4.988% | 4.986% | -0.2 bp |
| 30Y yield (close) | 5.315% | 5.301% | -1.4 bp |
| DXY (4 PM ET) | 101.799 | 101.999 | +0.20% |
| Gold (GC=F, 4 PM ET) | 4,013.3 | 4,027.0 | +13.7 (+0.34%) |
| USD/JPY (4 PM ET) | 156.83 | 157.52 | +0.44% |
| EUR/USD (4 PM ET) | 1.1198 | 1.1181 | -0.15% |
| Brent, December (BZZ26, 4 PM ET) | 117.12 | 115.56 | -1.33% |
| Brent, January (BZF27 = BZ=F, 4 PM ET) | 111.94 | 110.50 | -1.29% |
| Natural gas, November (NGX26, 4 PM ET) | 2.628 | 2.629 | +0.04% |
| Natural gas, December (NGZ26 = NG=F, 4 PM ET) | 3.051 | 3.046 | -0.16% |
| S&P 500 (close) | 7,623.68 | 7,676.77 | +0.70% |
Sources: Yahoo Finance query1 (v8/finance/chart, daily and 30-minute bars). Yields and the S&P 500 are daily closes; the rest are 4:00 PM ET prints (close of the 3:30 PM 30-minute bar). Contract rolls: Yahoo's continuous BZ=F now tracks January Brent and NG=F December gas, so both months are shown and nothing here compares one contract with another. The Nasdaq rose 0.82 percent to 26,169.38 (^IXIC).
Under the surface: the short end cheapened
Treasury's closing curve shows the 2-year at 4.68 percent (down 1 basis point), the 5-year at 4.84 (up 2), the 10-year unchanged at 5.00 and the 30-year at 5.31 (down 2) (Treasury nominal curve). investingLive's late-session quotes had the 2-year up 3.4 basis points at 4.716 percent; the two sources are taken at different times and we do not reconcile them. On the real side, the 5-year TIPS yield rose 3 basis points to 2.37 and the 10-year was unchanged at 2.66 (Treasury real curve). FRED's breakevens were close to flat: T5YIE 2.47 (from 2.48), T10YIE 2.34 (unchanged), T5YIFR 2.21 (from 2.20) (FRED, via our proxy). With oil down and breakevens flat, the small rise in 5-year yields was real yields, consistent with a market holding a high expected policy path into the meeting. That is a reading, not a finding.
The dollar and the reported causes
investingLive reported that "the USD gained against every major currency," most against the yen. FXStreet attributed part of the dollar's rise to Treasury yields that "show signs of stabilising after last week's decline" and to positioning before a week of central-bank decisions. On oil, investingLive wrote that "anticipated U.S. strikes on Iran did not materialize over the weekend." Its wrap also led with a reported IPO filing by an AI company and a semiconductor rally of more than 3 percent. None of these were verified by us. The dollar rising on a day when the 10-year did not move and oil fell does not fit a simple yield or haven story; the yen leg (USD/JPY up 0.44 percent) did most of it.
Conditional statements
- If Tuesday's 5-year note auction (1:00 PM ET, $70 billion) gives indirect bidders less than 54.3 percent of competitive awards, the lowest of its six prior auctions, then Monday's weak foreign share at the 2-year was not a one-off this week. Wrong if the indirect share is 54.3 percent or higher.
- If December Brent (BZZ26) is above $117.12 at 4:00 PM ET on Tuesday October 27, then the 10-year breakeven (FRED T10YIE) for that day is at or above Monday's 2.34. Wrong if T10YIE for that day prints below 2.34.
Tuesday's pre-registered plan (editorial/plans/2026-10-27.md, committed Monday evening before any Tuesday release) grades two legs against Monday's closes: the Conference Board's October confidence index at 10:00 AM ET (September 81.9; Conference Board), where 74.9 or lower means the 10-year closes below 4.986 percent and 88.9 or higher means above; and the 5-year auction's bid-to-cover, where 2.20 or lower means the 5-year closes above 4.824 percent and 2.38 or higher means below. The FOMC meets Tuesday October 27 and Wednesday October 28, with the statement on Wednesday at 2:00 PM ET and the press conference at 2:30 PM ET (Federal Reserve). There is no decision on Tuesday.
What we do not know
- Who stepped back at the 2-year. Indirect bidders are a category, not a list of names; a low share can mean less foreign demand or simply more direct bidding.
- Why the dollar rose with flat yields and lower oil. The named explanations are positioning ones; none is evidence.
What to read alongside
Nothing on this site is investment advice or a recommendation to trade. Most retail traders lose money. Conditional statements published here are falsifiable hypotheses, graded in public, not signals.